No parking default this time.
Scranton City Council on Tuesday approved legislation to help the outside operators of the city parking system of garages and street-metered spaces restructure their debt and avoid a default.
A default by the outside parking operators would have harmed the city’s financial stability and creditworthiness, city officials said.
Details surrounding the refinancing include:
Weekday street parking hours expanded: The refinancing’s main change for motorists and downtown businesses will be an expansion of street-metered parking hours on weekdays from 5 to 7 p.m. That’s two extra hours of having to pay for street parking at payment kiosks. The start time to pay for street parking will remain 8 a.m.
Free Saturday street parking: The plan also initially called for going from free street parking Saturdays to having to pay at kiosks for parking from 7 a.m. to 7 p.m. The downtown businesses community, residents and others opposed that expansion. The city negotiated keeping Saturday street parking free, in exchange for the city contributing $50,000 a year for three years to offset the $75,000 in revenue that Saturday hours were estimated to generate, Mayor Paige Gebhardt Cognetti announced Tuesday before the council meeting.
Parking rates will rise 25 cents in 2026: The street-metered rate paid at kiosks will rise from $2 per hour to $2.25; while the parking garage rate will increase from $1 per hour for up to 10 hours to $1.25 per hour. These increases were previously approved several years ago to take effect in 2026.
“A $15 million haircut” by bondholders: By allowing a refinancing, bondholders will take what city and parking officials describe as a $15 million haircut, meaning a reduction by $15 million in the amount of the returns they initially expected to receive over the life of the bonds over 45 years, or from 2016 to 2061. The refinancing also extends the term of the arrangement another nine years, or to 2070.
City provides $2.15 million: The city will contribute at least $2.15 million to the system over 10 years. The initial refinancing plan called for the city to contribute $200,000 a year for 10 years to the parking system for capital maintenance and repairs. Under the negotiation to keep Saturday street parking free, the city instead would contribute $250,000 a year for the first three years of the 10-year period, or $50,000 more per those first three years; and then revisit the Saturday hours situation after three years.
The extended weekday hours should start next month, city Solicitor Jessica Eskra said.
“The closing on the bonds will occur over the next two weeks, to be completed by the end of July. I anticipate a rollout of the new parking enforcement hours to follow sometime in August,” Eskra said.
The current parking-system operation stems mainly from a 2012 default by the city on Scranton Parking Authority debt, which led in 2016 to the “monetization” of the system and the outside operator brought under a concession lease. But the COVID-19 pandemic and lingering aftermath hindered the parking system, such that the concessionaire now needs to refinance debt to avoid default. The city has a hand in all of this and the refinancing package came before council in recent weeks in the form of legislation to accomplish aspects of the debt restructuring.
At the July 8 council meeting, business owners and other stakeholders spoke in opposition to an expansion of street-metered hours, particularly going from free parking Saturdays to charging for 12 hours. They feared that such an expansion would keep people away from the downtown on Saturdays and kill commerce. Later that night, council deadlocked on advancing on second reading an ordinance involving the parking refinancing. The ordinance failed in a 2-2 vote — with council President Gerald Smurl and Jessica Rothchild in favor of advancing the ordinance, and Mark McAndrew and Tom Schuster opposed, and Bill King absent. The four members who were present that night all wanted the administration and parking operators to ask bondholders to keep Saturday parking free. McAndrew and Schuster voted no because they wanted to wait to see what negotiations over expanded street hours would produce. Smurl and Rothchild did not want to delay the process.
With Saturday hours having been scrapped, the failed ordinance was resurrected during Tuesday’s council meeting.
“The city went into default once before and I’m not going to let history repeat itself,” King said.
Smurl added, “I’m not also going to let this go into receivership like last time. We all saw what it did last time — we had zero control. To allow that to happen again — for me, it’s off the table.”
Rothchild said, “This is going to help us avoid default and receivership and getting back into a situation that we were in previously. So I believe this is the most fiscally responsible option for the city.”
McAndrew and Schuster both took credit for getting Saturday hours scrapped.
“Had I not voted no last week, I’m not sure we ever would have seen a better outcome,” McAndrew said.
“With the failing motion last week, the administration was forced to go back to the negotiating table,” Schuster said. “I am happy that concessions have been made, but I feel the deal could have been a little bit better. If the city didn’t have to come out-of-pocket for the money that was asked here, I would be voting yes for this.”
Council then voted 4-1 to adopt the resurrected ordinance, with Schuster casting the lone dissent.